Has Sterling Turned The Corner?

One of the most important political events to watch this year is Brexit. In particular, the UK will formally leave the European Union at the end of March if nothing else happens (‘No Deal’).

This possibility is fairly high because many MPs opposed the PM’s deal. And, that the PM has refused to call a second referendum. Of course, with things in a flux, the situation may well change quickly between now and March.

For the GBP, it remains depressed by Brexit. The last few weeks saw GBPUSD plunge below 1.240 on deteriorating market sentiment and Brexit. This flash crash may have taken out a lot of long stops as the rate rally sharply soon after (touched 1.275 this morning). Another pair that had suffered a flash crash recently was GBPJPY, which plunged almost 1000 basis points in a matter of days.

Technically 1.280 is now the near-term ceiling for Cable. A break of this level should see it rally towards the major round number level at 1.300. Cable’s intraday low of 1.237 is assumed to be the medium-term low for now.

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